Daily Briefing

AIRLINES

United cuts back mechanic furlough

United Airlines says it will need to furlough fewer mechanics than it previously thought after talks with their union, the Teamsters. In a message to United workers last week, the nation’s third-largest airline said the changes will allow it to keep some maintenance work at New York-LaGuardia. United previously said it would close the maintenance facility there around Jan. 11. Maintenance work in Newark and Philadelphia will still shift to John F. Kennedy International Airport in New York as planned, the airline told workers. The airline did not say how many furloughs had been avoided.

BANKING

Fifth Third takes share of bailout

Regional bank Fifth Third Bancorp said Wednesday it received $3.4 billion as part of the government’s $700 billion bank investment program. The government investment, administered by the U.S. Treasury Department, is part of a broader program to invest in banks amid the ongoing credit crisis in an effort to stabilize the financial services sector and spur lending between banks and to consumers and other businesses. The program calls for the U.S. Treasury Department to receive preferred stock and warrants to purchase common shares in return for the investment. The preferred stock carries an interest rate of 5 percent per year for the first five years. It then increases to 9 percent after five years if the preferred shares are not redeemed.

COMMUNICATIONS

China approves licences for 3G

China’s Cabinet said Wednesday it has approved licenses for next-generation mobile phone services in a long-delayed step that is expected to trigger billions of dollars in equipment sales. China is one of the last major markets to roll out third-generation, or 3G, services and the step comes at a critical time for global equipment suppliers as demand elsewhere weakens amid economic turmoil. The government will issue licenses for two global 3G standards and a homegrown Chinese standard, the Cabinet said on its Web site.

COMPUTERS

Dell restructures top management

Computer maker Dell Inc. said Wednesday that Michael Cannon, president of global operations, and Mark Jarvis, chief marketing officer, will leave the company as part of a global restructuring.

Cannon will retire from the company effective Jan. 31 and be replaced by Jeff Clarke, whose formal title will become vice chairman of global operations and head of Dell’s business client product group.

Jarvis is slated to leave Dell during this fiscal quarter, and will be replaced by Erin Nelson, formerly vice president of marketing for Europe, the Middle East and Africa. Cannon and Jarvis will both remain consultants to the company, Dell said.

China convicts 11 in Microsoft piracy

A court in southern China convicted 11 people on Wednesday of violating national copyright laws and participating in a sophisticated counterfeiting ring that for years manufactured and distributed pirated Microsoft software throughout the world.

The men were sentenced by a court in the city of Shenzhen to between 1 1/2 to 6 1/2 years in prison, according to court papers released late Wednesday.

Microsoft applauded the sentence in a statement released late Wednesday Beijing time, saying they were the stiffest sentences ever handed down in this type of Chinese copyright infringement case.

CURRENCY

Slovakia adopts euro for new year

Slovakia will start the new year as the 16th country to join the euro, a European Union project that also celebrates its 10th birthday. With Slovakia, the currency will be used by 330 million people with an annual gross domestic product of more than $5.6 trillion. Economists predict the strong and stable euro will help the country weather the storm.

ENERGY

Iraq opens 11 oil fields to bidding

Iraq’s oil minister has announced that 11 oil and gas fields are open to bidding from developers in the second postwar round of licensing.

They include the huge Majnoon and West Qurna fields, which are only partially developed and producing far less than their estimated potential individual output of 600,000 barrels a day.

Contracts from that round are expected to be signed in the middle of next year and those for the second round by the end of the year.

FINANCES

Mortgage rates stay in record fall

Rates on 30-year mortgages fell to a record low for the third straight week and borrowers took advantage of the drop, sending new applications soaring.

With the Federal Reserve on the verge of pouring hundreds of billions of dollars into the devastated U.S. housing market, mortgage rates have plunged to the lowest level since Freddie Mac started tracking the data in April 1971.

Freddie Mac reported Wednesday that average rates on 30-year fixed mortgages dropped to 5.1 percent this week, down from the previous record of 5.14 percent set last week.

Applications high as mortgages fall

Mortgage applications remained at their highest level in more than five years last week, as borrowers took advantage of attractive rates and rushed to refinance their home loans.

The Mortgage Bankers Association said Wednesday its weekly application index was essentially unchanged for the week ending Dec. 26. The index came in at 1245.7 from 1245.4 a week earlier. Applications surged earlier this month to the highest level since July 2003, when refinancing activity boomed at the peak of the housing market.

PNC purchases National City

PNC Financial Services Group Inc. said Wednesday it has completed its acquisition of National City Corp., a Cleveland-based bank that dates back to 1845.

Pittsburgh-based PNC is the first U.S. bank to use money obtained under the government’s $700 billion bailout program to make an acquisition. PNC and National City announced plans for their $5.6 billion deal on Oct. 24.

The Justice Department has told PNC it will have to sell 61 National City branches in western Pennsylvania to satisfy antitrust concerns.

GMAC wraps deal to raise capital

The financing arm of General Motors Corp. completed a complicated debt deal that fell short of the goal it set for the amount of fresh capital needed to help the auto loan company ride out a historic collapse in auto sales.

The results of the debt exchange, announced Wednesday, came a week after the Federal Reserve approved GMAC Financial Services’ application for bank holding status, making it eligible for a portion of the $700 billion bank rescue package. GMAC said that bondholders owning $21.2 billion of its debt agreed to the exchange. A total of $17.5 billion, or 59 percent, of the GMAC notes were tendered, along with $3.7 billion, or 39 percent, of notes issued by Residential Capital LLC, GMAC’s home loan unit. GMAC had hoped for 75 percent participation on both offers.

HOUSING

LyondellBasell mulls bankruptcy

LyondellBasell Industries, the world’s third-largest independent chemical company, said Wednesday that it is considering bankruptcy protection as a broadening recession eats away at consumer demand. The company is controlled by Russian billionaire Len Blavatnik, who serves as chairman. Blavatnik is also one of several wealthy Russian investors involved earlier this year in a fight for control over TNK-BP, a joint venture with the British oil company BP PLC.

INSURANCE

Report: AIG seeks to relax bidding

American International Group Inc. is preparing to ask the Federal Reserve to relax rules on how bidders pay for assets as it tries to repay a $60 billion loan, according to a report in the Financial Times on Wednesday.

The New York-based insurer wants to boost competition for the assets by allowing bidders to pay using a greater portion of shares, or through installments, the newspaper reported, citing people close to the situation.

Under the current plan, AIG can only sell assets to bidders paying at least 90 percent of the price in cash.

AIG, once the world’s largest insurer, is in the process of liquidating assets to repay the loan, which is part of a $150 billion bailout from the federal government.

—- Wire service reports

Atlanta’s Interface to cut 530 jobs

Atlanta-based Interface Inc. will cut 530 jobs, or about 14 percent of its worldwide work force, and close manufacturing operations at a Canadian plant because of softening demand.

The carpet manufacturer expects to save about $30 million a year from the moves, expected to be complete in the first quarter. Interface will keep its sales and distribution operation in Canada.

It will take a fourth-quarter restructuring charge of about $11 million for severance, a write-down of the Canadian manufacturing operations and other exit costs. About $8.5 million of that amount will be cash expenditures, primarily for severance.

“As a result of our restructuring, we are moving forward as a leaner company while maintaining our ability to provide superior service to our customers globally,” said Chief Executive Daniel T. Hendrix.

He said the company will continue to cut costs, become more efficient and generate cash to reduce debt while preserving its ability to invest in new markets.

Dow Jones wire service